Work Opportunity Tax Credit (WOTC)

Overview

The tax credit allows employers to reduce their federal tax liability by up to $9,600 per new hire. For-profit businesses of any size qualify. 501(c) non-profits qualify for the veteran target groups only. And the tax credit applies to temporary, seasonal, part-time and full-time workers. The tax credit is available for new hires with job start dates through December 31, 2025.

The WOTC applies only to new employees who have never worked for the hiring employer at any other time:

• Any size for-profit employer may apply for the WOTC.
• 501(c) non-profit employers may apply for the WOTC for the veteran target groups only.
• No limit to the number of new hires an employer may claim for the WOTC in any calendar year.
• No relatives or dependents or majority business owners qualify as WOTC hires.
• Self-employed individuals do not qualify as WOTC hires.
• Temporary, seasonal, part-time and full-time work applies.
• Any type of job is acceptable.

Apply

How to Apply

The Work Opportunity Tax Credit Program is for new hires and has an IRS 28-calendar day filing deadline from the new hires first day of work. Applications submitted for previously employed individuals, relatives of majority owners of the business or independent contractors do not qualify. The first day of work (start date) is considered to be the first day the person performed any work in which the individual was paid for, including training or employment on a "trial" basis.

To receive a certification that allows an employer to claim the tax credit, the employer must complete the following two forms and submit them electronically, if possible, per instructions below the forms:

IRS Form 8850 (Pre-Screening Notice and Certification Request); read the Instructions for completing the form

• New hire completes, signs, and dates front of the form by date job is offered, or within filing deadline
• Employer or employer's representative completes, signs, and dates the back (page 2) of the form
• Signatures must be original, faxed/scanned copies, or electronically signed

ETA Form 9061 (Individual Characteristics Form from the U.S. Dept. of Labor)

Employer or employer's representative and/or new hire completes, signs and dates the two-page form

• If new hire has been conditionally certified as belonging to a target group, the employer completes the bottom portion of the ETA Form 9062, signs and dates it. This form takes the place of the 9061. The 9062 form is made available only through special arrangements with the WOTC Unit.

How to Submit

To submit applications electronically you must first have a completed and signed IRS 8850 and ETA 9061 Forms for each application you wish to submit. This process must be done for every single application you intend to submit electronically. Be sure not to leave any of the signature lines, date fields or boxes blank. The application must be fully completed before submittal. The signed forms must be submitted within 28-calendar days following the job start date.

The employer/representative should submit WOTC application forms electronically via Minnesota's online automated application system. To register for an account, if new to the WOTC Program, go to the Work Opportunity Tax Credit System Login site and select "Employer Registration" in the "New User" box. This will walk you through the registration process. Once registered, you can take your completed paper application and transmit the information via data entry using the "Enter New Application" function found under the "WOTC Application" tab, then keep the original in your files for auditing purposes. If unable to register successfully, please contact the WOTC Unit for registration assistance (651-259-7507, toll-free 888-234-5521, or email deed.wotc@state.mn.us).

If it is not possible to submit forms via the online automated application system, send the forms via email, fax, or mail. For emailed or faxed applications, the email/fax received date will be used for the postmark date.

Email: deed.wotc@state.mn.us

Fax: 651-297-7722

Mail

Minnesota Department of Employment and Economic Development
WOTC Unit
180 E 5th St Suite 1200
St. Paul, MN 55101

For mailed applications, the postmark date by the U.S. Postal Service will be used.

What's Next

The WOTC Unit will verify employee eligibility for the target group(s) checked on the 8850 and 9061 forms and will notify the employer to provide specific documentation only when needed.

The WOTC Unit issues a written notice to the employer or to the employer's representative stating the results of the employer's Certification request.

There are Espanol versions of the 8850 and 9061 forms on the U.S. Department of Labor website. The employer may use the Espanol forms to help job applicants complete the required forms in English. The Espanol versions do not replace the forms in English, which must be submitted.

To claim the tax credit when filing your federal business tax return, use IRS form 5884. 501(c) tax exempt organizations use IRS form 5884-C.

ETA Form 9198 (Employer Representative Declaration Form)

To be used by employers and their representatives to allow the employer's representatives the ability to perform acts for the employer with respect to the WOTC certification process. This form is not to be used by employers submitting applications on their own behalf.

Qualifying Groups

For the employer to claim the WOTC for a new hire, the employee must be certified as a member of a targeted group by meeting the criteria described in any of the groups listed below. The employer is not expected to verify eligibility of the employee at time of hire.

Short-term Temporary Assistance for Needy Families (TANF) Recipient (Group 1)

A member of a family that received assistance through Minnesota Family Investment Program (MFIP) for any 9 months during the 18-month period ending on the hiring date.

Qualified Veteran (Group 2a)

A member of a family that received food stamps for at least a 3-month period during the 15-month period ending on the hiring date.

Disabled Veteran (Group 2b)

Disabled veteran entitled to compensation for a service-connected disability hired within one year of discharge or release from active duty.

Unemployed Disabled Veteran (Group 2c)

Disabled veteran entitled to compensation for a service-connected disability and having aggregate periods of unemployment of six months or more during the one-year period ending on the hiring date.

Unemployed Veteran - 4 Weeks (Group 2d)

A veteran having aggregate periods of unemployment of at least four weeks but less than six months in the year prior to being hired.

Unemployed Veteran - 6 Months (Group 2e)

A veteran having aggregate periods of unemployment of six months or more in the year prior to being hired.

Qualified Ex-felon: (Group 3)

Individual convicted of a felony and who is hired within one year after the conviction or release date from a correctional facility.

Designated Community Resident (Group 4)

Individual who is age 18 but not yet 40 years old on the hire date and who lives within the Minneapolis Empowerment Zone or a Rural Renewal County (RRC). The Rural Renewal Counties are Big Stone, Chippewa, Cottonwood, Faribault, Jackson, Kittson, Koochiching, Lac qui Parle, Lincoln, Marshall, Martin, Murray, Norman, Pipestone, Red Lake, Redwood, Renville, Stevens, Traverse, Wilkin and Yellow Medicine.

NOTE: Minnesota employers who hire employees living in certain counties in Iowa, North Dakota and South Dakota may also claim the tax credit.

• Iowa: Emmet, Kossuth, Osceola, Winnebago and Worth.
• North Dakota: Pembina, Traill and Walsh.
• South Dakota: Deuel and Grant

WOTC applications for residents living in these counties and working in Minnesota should be mailed to the Minnesota WOTC Unit.

Vocational Rehabilitation Referral (Group 5)

Individual with a physical or mental disability referred to an employer upon completion of (or while receiving) rehabilitation services by an agency approved by the State, by an employment network under the Ticket-to-Work Program, or by the Department of Veterans Affairs, and with a written employment plan.

Qualified Summer Youth (Group 6)

Individual who is age 16 or 17 but not yet 18 years old on the hire date and who works for the employer between May 1 and September 15 and lives in an Empowerment Zone.

Food Stamp Recipient (Supplemental Nutrition Assistance Program - SNAP) (Group 7)

Individual who is age 18 but not yet 40 as of the hire date and a member of a family that received food stamps for either the 6-month period ending on the hiring date, or for at least 3 of the 5 months ending on the hiring date in the case of a family member who ceased to be eligible for such assistance and is an able-bodied adult without dependents.

Supplemental Security Income Recipient (Group 8)

Individual who has received SSI benefits for any month ending during the past 60-day period ending on the hiring date.

Long-term Family Assistance Recipient (Group 9)

Member of a family that received MFIP benefits (a) for at least 18 consecutive months ending on the hiring date, or (b) member of a family that received MFIP for any 18 months beginning after August 5, 1997, and the earliest 18-month period, beginning after August 5, 1997, ended during the past 2 years, or (c) whose family stopped being eligible for MFIP because Federal or state law limited the maximum time those payments could be made, and the individual is hired not more than 2 years after eligibility expired.

Qualified Long-Term Unemployment Recipient (Group 13)

Individual who is in a period of unemployment not less than 27 consecutive weeks on the day before starting work and received UI compensation for a minimum of one week during the current period of unemployment.

ETA Form 9175/Self-Attestation

Calculate Your Credit

The Work Opportunity Tax Credit is a two-tier tax credit. How much credit an employer may actually claim at tax time for a certified new hire depends on the targeted group of the new hire, how many hours the individual works for the employer, and how much in qualified wages the worker earns.

There is no limit to the number of new hires that can qualify an employer for the WOTC in any calendar year and the amount of tax credit an employer can accrue.

For all target groups listed below, with the exception of the Long-term Family Assistance Recipient target group, the tax credit applies to the first year of employment only.

Target Groups 1, 2a, 2d, 3 - 5, 7 - 8 and 13

The maximum tax credit an employer can claim for the new hire is $2,400. Only the first $6,000 of qualified wages can be considered.

Full WOTC credit requires 400 hours of work.
Calculate 40% of wages earned up to $6,000 wage cap.

Partial WOTC credit requires at least 120 hours but less than 400 hours.
Calculate 25% of wages earned up to $6,000 wage cap ($1500 maximum credit allowed).

For Disabled Veterans (Group 2b)

For disabled veterans discharged within a year: Wage cap is first $12,000 of qualified wages. Maximum tax credit is $4,800 per new hire.

Full WOTC credit requires 400 hours of work.
Calculate 40% of wages earned up to $12,000 wage cap.

Partial WOTC credit requires at least 120 hours of work but less than 400 hours.
Calculate 25% of wages earned up to $12,000 wage cap ($3,000 maximum credit allowed).

For Unemployed Disabled Veterans (Group 2c)

Wage cap is first $24,000 of qualified wages. Maximum tax credit is $9,600 per new hire.

Full WOTC credit requires 400 hours of work.
Calculate 40% of wages earned up to $24,000 wage cap.

Partial WOTC credit requires at least 120 hours of work but less than 400 hours.
Calculate 25% of wages earned up to $24,000 wage cap ($6,000 maximum credit allowed).

For Unemployed Veterans - Six Months (Group 2e)

Wage cap is first $14,000 of qualified wages. Maximum tax credit is $5,600 per new hire.

Full WOTC credit requires 400 hours of work.
Calculate 40% of wages earned up to $14,000 wage cap.

Partial WOTC credit requires at least 120 hours of work but less than 400 hours.
Calculate 25% of wages earned up to $14,000 wage cap ($3,500 maximum credit allowed).

For 501(c) tax-exempt organizations (Veteran target groups only)

Wage cap is based on qualified wages for each individual veteran target group listed above. A refund is issued against the employer's social security tax liability.

Full WOTC credit requires 400 hours of work.
Calculate 26% of wages earned up to specific wage cap.

Partial WOTC credit requires at least 120 hours of work but less than 400 hours.
Calculate 16.25% of wages earned up to specific wage cap.

For Qualified Summer Youth (Group 6)

Wage cap is first $3,000 of qualified wages. Maximum tax credit is $1,200 per new hire.

Full WOTC credit requires 400 hours of work.
Calculate 40% of wages earned up to $3,000 wage cap.

Partial WOTC credit requires at least 120 hours but less than 400 hours.
Calculate 25% of wages earned up to $3,000 wage cap ($750 maximum credit allowed).

For Long-term Family Assistance (LTFA) recipient (Group 9)

The WOTC applies to the first two years of employment. Wage Cap is first $10,000 of qualified wages in each year. Maximum first year tax credit is $4,000 per new hire. Maximum second year tax credit is $5,000 per new hire. Maximum two year combined tax credit is $9,000 per new hire. The credit in second year of employment requires no minimum number of hours worked.

Full WOTC credit in first year of employment requires 400 hours of work.
Calculate 40% of wages earned up to $10,000 wage cap.
Calculate 50% of wages earned (second year of employment) up to $10,000 wage cap.

Partial WOTC credit in first year requires at least 120 hours of work but less than 400 hours.
Calculate 25% of wages earned up to $10,000 wage cap ($2500 maximum credit allowed).

Qualified Wages and Hours

Qualified first-year wages and hours begin the day the employee starts work. The first year of employment is 365 consecutive days. If breaks in employment of a certified worker occur during the first year, the employer should not file another application for the WOTC because of such breaks.

The employer is to count all wages earned and hours worked during the first year of employment. For an individual certified as Group 9 (LTFA), wages are to be counted in the same way for the second year of employment.

For workers certified as Group 4 or 6 (Designated Community Resident and Qualified Summer Youth), qualified wages and hours are only those which are earned while the worker resides in the Minneapolis Empowerment Zone or for Group 4 in a designated Rural Renewal County.